Cost Segregation Services
May 16, 2022
Accelerate Growth Through Calculated Depreciation
Cost segregation is a strategic cash tax planning tool that allows property owners to increase their cash flow through the acceleration of depreciation deductions and deferral of tax payments.
The process involves “segregating” a portion of the building into shorter lived assets. The ideal timeframe in which to conduct a cost segregation analysis is within the same year a building is constructed or an existing structure was purchased. However, this planning tool can also be implemented on a structure that was constructed or acquired several years earlier, thanks to the IRS “catch-up” provision that offers a taxpayer the opportunity to realize any missed depreciation without having to file an amended tax return.
Do Any of the Following Apply to Your Business?
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Did you acquire, build or renovate any commercial building on or after January 1, 2006?
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Are you planning on acquiring, building or renovating any property in the next 12 months?
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Are you planning on expanding your existing facilities?
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Are you planning on demolishing any property?
The PLUS—Why Choose Cherry Bekaert
Additional benefits to computing a Cherry Bekaert cost segregation study:
- Breaks your building down into the various systems called Units of Property, as defined in the tangible property regulations, which can be used as a guideline for future capitalization and expensing of improvements
- Identifies the viability of potential Energy credits, deductions, rebates and exemptions
- Discovers potential personal and real estate property tax opportunities to save you money
Cost Segregation Services
Cherry Bekaert’s cost segregation services can provide:
- A substantial reduction in tax liabilities/lower tax bracket status
- Reduced current year estimated payments
- Accelerated depreciation
- Increased cash flow
- The opportunity to claim “catch-up depreciation” from previously misclassified assets
- The ability to write-off building components as they are replaced
- Easy identification of leasehold improvements when a tenant moves out
- Reduction of real estate property taxes
- Shorter depreciable lives for partner buyouts and step-ups
In our experience, through cost segregation studies, we’re seeing between 10%-60% average reclassification of a building’s costs into shorter lived assets. Below is a breakdown of these reclassifications by building type:
